Ibrahim interviewed by Ryan Miller of the “Making Billions” podcast
Ibrahim Abdel Rahim joined Making Billions with Ryan Miller, a podcast whose audience includes emerging fund managers and entrepreneurs, to explain search funds and how Moonbase Capital works with searchers.
The conversation covered what a search fund is, where it sits between venture capital and private equity, and the lessons Ibrahim has drawn from building Moonbase Capital: how to win over searchers, how to protect the downside, and how to build a network of advisors around them.
Key takeaways
- Search funds fill the middle of the market. Companies too big for venture capital and too small for private equity make up a huge part of the economy, yet get little investment. Ibrahim sees search funds growing into a third asset class alongside PE and VC.
- Be useful to searchers and the best ones come to you. Moonbase built its reputation through podcasts, white papers and webinars, then by supporting searchers closely. Searchers recommend you to other searchers, which builds the pipeline.
- Two years to vet the entrepreneur. Investors work closely with searchers while they look for a company, and can invest once they find one but aren’t obliged to.
- Diversify to protect the downside. With tickets of roughly €0.5–1M spread across 50–60 companies, Ibrahim argues the downside is close to zero, while one or two high-growth companies can return 10–20x. He cites Stanford’s ~33% average IRR over 30 years, with the caveat that it may not hold as the market grows.
- Be a human before an investor. Entrepreneurs respond to investors who treat the venture as their journey and work with them as a team rather than as the money.